What to look for in a lender?

When you shop for a mortgage, you’ve got a lot to think about. How much can you afford? If you’re buying a house, where do you want to live? If you’re looking to refinance, what are your goals?

Another key consideration should be who handles your mortgage. It can be tempting to look at the lender with the lowest overall rate. Advertised rates themselves can sometimes be unintentionally misleading because your rate is determined mostly by your personal financial profile. In most situations, you’re probably not getting the advertised rate.

Although your rate should be a consideration, it shouldn’t be the only one. You should also be looking at the options the lender provides, the level of service, ease of use and any fees they may be charging.

If you’re looking for the best possible mortgage financing, we’ll take you through what you need to look for when shopping around. Let’s start at the place most people would look when starting their mortgage shopping journey – the interest rates. After that, we’ll take a look at some of the less obvious factors that can set brokers and lenders apart.

Mortgage Rates – Buyer Beware

When you’re shopping for a mortgage, it’s only natural to look at interest rates. However, publicly available rates on mortgages can be misleading. It’s not intentional, but let’s walk through why you shouldn’t take these quotes at face value.

There are actually a number of items that help decide your interest rate. The base rate that people get is influenced by market factors, including movements in the bond market. Although there’s not a perfect correlation, generally if people are worried about the economy, they pull their money out of stock and buy bonds for the guaranteed return, pushing mortgage rates down as mortgage bonds become more popular. If it’s the other way around, rates tend to go up.

However, your personal financial situation has a lot to do with your rate as well. When mortgage lenders set your rate, they look at a number of factors in determining your personal interest rate. Two of the biggest ones are your median Credit Score and your down payment amount or equity stake following the closure of the mortgage. For both categories, the higher the better. Others include the loan type as well as the number of prepaid interest points you choose to pay for.

Shorter terms (e.g. a 15-year mortgage) often mean lower rates because the investor doesn’t have to wait as long for the payback.

However, because everyone’s loan is different, each quote on large lenders’ websites comes with its own set of assumptions. These include:

• Loan amount
• Term
• Loan-to-value (LTV) ratio: a comparison of the loan amount with the actual value of the home. You get this by taking the value of the home and subtracting any existing down payment or equity stake from 100 (E.g., 3% down payment equals 97% LTV)
• Number of discount or prepaid interest points paid

When comparing rates, keep three things in mind.

• Try to compare apples to apples. If you’re looking at a 30-year fixed, compare with other 30-year fixed rates.
• Keep in mind lenders may be using different hypothetical scenarios in their assumptions to come up with the rates.

Although many of us start with the interest rate when shopping for a mortgage, it definitely shouldn’t end there.

It can be easy to get caught up in the rate game and picking a lender because they offer a rate that’s 0.125% or 0.25% lower than the next mortgage originator down the street. While it may seem like a good idea at the time, it shouldn’t be the only basis for your choice of mortgage lender. Even though our interest rates at Carlson Mortgage are usually some of the lowest in Missouri (coupled with $0 in fees), here are a few other things to consider.

Does the Lender Offer Anything to Give You a Leg Up?

Beyond the rate itself, you should ask yourself what a lender offers you when it comes to your mortgage transaction. Whether you’re looking to buy or refinance, we offer some cool advantages to our clients.

Pre-Approvals

If you’re looking to buy a home, you’ve probably noticed it’s a very competitive market out there right now. Inventory is low, and that means that much of the time, sellers have a choice when it comes to whose offer they’ll accept. Sometimes it comes purely down to how high the bid is, but sellers also appreciate certainty and that’s where our thorough fully verified pre-approvals comes in.

Not only do we do the basic pre-approval, but we verify your income and assets by collecting documentation like W-2s, bank statements and pay stubs. This gives your offer equivalent strength to that of a cash buyer because the seller knows that your information has been verified by us and you have access to the financing to back up your offer, which could give you an advantage over other prospective buyers in a multiple offer scenario. Please see our Pre-Approval Page for more information.

Accessibility

We are small and local and we are only licensed in Missouri. Our loan officers are here to answer your questions even after-hours and on weekends.

Client Service

When you’re looking for a broker or a lender, you want to find one who will work for you and provide the highest level of client service.

We maintain that relationship with you throughout the life of the loan and we’ll also be able to let you know when it might be a good time to refinance if you have the opportunity to lower your interest rate, remove mortgage insurance premiums or use your existing equity to accomplish any other financial or life goal you may have.

We also won’t charge any fees for paying off your loan early, to get your mortgage documents or to pay online or over the phone. Other brokers and lenders can’t always make the same claims.

How we can help

Our loan application can be found here or you can call us at 314-329-7314 to speak with one of our loan officers.

Posted by: Carlson Mortgage – a St. Louis mortgage broker providing home loans in the state of Missouri. We are routinely ranked as a #1 mortgage broker in Missouri on Yelp, Google and Zillow. We can be reached at (314) 329-7314 seven days a week. Let us be your source for some of the lowest mortgage interest rates in St. Louis on first-time home buyer, conventional, FHA, Veterans (VA), Jumbo and condominium (condo) financing. Since 2004, we’ve been providing home loans and mortgage services in St. Louis that are tailored individually to your unique needs and to your financial situation. Our loan officers speak English, Spanish and Russian. Call us today to inquire about home loan interest rates, to get pre-approved for a purchase or a refinance mortgage, or if you have any general mortgage lending questions.